PERS Update - For Informational Purposes Only

  • This information is being provided to assist employees in researching, reviewing, and evaluating how proposed PERS reform and/or changes may impact their retirement benefits. 
  • Employees are responsible for researching, verifying, and evaluating how these changes and reform measures may impact them and their retirement benefits.
  • SOU is NOT providing legal interpretation of the PERS reform and/or changes and cannot evaluate how these changes may impact an individual employee’s retirement benefits.
Recent reports about proposed reform to the Public Employees Retirement System (PERS) has generated considerable discussion and many questions.  Human Resources Services provides the following information to assist SOU employees with educating themselves and understanding action that can be taken now:

Get Informed

There are multiple bills that have been introduced in the 2017 legislative session regarding retirement programs that are being considered.  Below is an overview of three bills that, if passed, will impact PERS members.  You are encouraged to research and monitor PERS legislation to determine how these changes may impact you. Regardless of legislative action, a licensed financial advisor can assist and advise you with your specific retirement goals and needs. Three free sessions with a Financial Advisor are available through the EAP.

 

Governor Kate Brown Appoints Members of Task Force to Address PERS Liability.  Task Force is charged with identifying and ranking options for reducing the PERS liability by $5 billion.  Final Report to Governor Brown to be issued by November 1, 2017.  Read the full press release.

 

Senate Bill 309:

Eliminates option of members of individual account program of Public Employees Retirement System to receive distributions as installment payments upon retirement.  Requires members retiring on or after January 1, 2019, to receive distributions as lump sum.  [PERS Tier 1, Tier 2 and OPSRP]

UPDATE:  Did not move out of committee.

Visit the Oregon Legislative Information website for full text.

Senate Bill 1068:

(Introduced 6.5.2017) Senate Bill 1068:  SB1068 was introduced on June 5, 2017.  The bill would require the PERS Board to allocate a portion of the 6% employee contribution that is currently deposited into the Individual Account Program (IAP) account into a separate risk sharing account.  This risk sharing account would then be used to help fund the Tier 1, Tier 2, and OPSRP pension benefits accrued after July 1, 2018.  Beginning July 1, 2018, 1% of the employee's contribution* would be deposited into the risk sharing account and the balance (5%) would be deposited into the employee's IAP account.  Beginning July 1, 2019, 2% of the employee's contribution would be deposited into the risk sharing account and the balance (4%) would be deposited into the employee's IAP account.  Begining in 2021, the PERS Board would review and determine the percent that would be allocated to the risk sharing account based on the criteria outlined in the statute.   The risk sharing contribution rate may not exceed 4%.

UPDATEReferred to Joint Committee On Ways & Means on 6.5.2017.

UPDATEAs of June 14, 2017, no meetings and/or further discussions have been scheduled.

Note: SOU currently pays the 6% employee contribution on behalf of all employees. 

Visit the Oregon Legislative Information website for full text.

Senate Bill 559:

Changes calculation of final average salary for purposes of Public Employees Retirement System to use five years of salary instead of three years, for salary paid on and after January 1, 2018.  Directs Public Employees Retirement Board to recalculate employer contribution rates to reflect savings attributable to Act. Provides for expedited review of Act by Supreme Court upon petition by adversely affected party. Declares emergency, effective on passage. [PERS Tier 1, Tier 2 and OPSRP][Full Formula or Full Formula + Annuity]

UPDATEAs of June 14, 2017, no meetings and or further discussions have been scheduled.

Visit the Oregon Legislative Information website for full text.

Senate Bill 560: 

Redirects employee contributions made by member of system from individual account program to account to be used to pay for member's pension or other retirement benefits accrued on or after January 1, 2018.  For years beginning in 2018, caps at $100,000 annual salary used to calculate final average salary for purposes of Public Employees Retirement System. Directs Public Employees Retirement Board to recalculate employer contribution rates to reflect savings attributable to Act. Provides for expedited review of Act by Supreme Court upon petition by adversely affected party. Declares emergency, effective on passage. Excludes Judges from the $100,000 limit. [PERS Tier 1, Tier 2 and OPSRP] [Average Ending Salary: Full Formula or Full Formula + Annuity][IAP: all plans]

UPDATE:  Senate Bill Amendments added 3.15.2017:  reduces Tier 1/2 pension multiplier from 1.67% to 1.00%; Tier 1 - reduces "assumed rate" from 7.5% to 3.5%; Tier 1/2 - eliminates unused sick leave and/or vacation lump-sum payout from the calculation of average ending salary; OPSRP minimum retirement age increased to age 67 from age 65; New employees - increases "wait time" from 6 months to 12 months to become members; Current and new employees - changes definition of qualifying positions from 600 hours in calendar year to 1,000 hours in calendar year.

UPDATE: Senate Bill Amendment #10 would replace the original proposed bill and previous amendments:  reduces Tier 1/2 pension multiplier to a "rate to be determined" from 1.67% for years of service on/after January 1, 2018; reduces OPSRP pension multiplier to a "rate to be determined" for service on/after January 1, 2018; All Tiers - Average Ending Salary - average to be used is 3 years for service before January 1, 2018 and to five years in the 5 years for service after January 1, 2018; Tier 1, Average Ending Salary will exclude lump-sum payment for unused vacation that is accrued after January 1, 2018; Tier 1/2, Average Ending Salary will not include unused Sick Leave accrued on/after January 1, 2018;  Tier 1 - Money Match Formula, annuity rate used will be the lesser of the rate determined by the board or the federal Pension Benefit Guaranty Corporation (this is effective for retirements on or after the effective date of this act - The act has an emergency clause stating it is effective upon passage);Employer cannot make the employee contributions after January 1, 2018 or expiration of bargaining agreement; creates a "member pension contribution account" (this is a additional account) that will be used to help fund the lifelong pension benefit; ; Board will set employee contribution rate for the "member pension contribution account" every 2 years - no rate is currently identified;  employee can redirect contributions that were to be made to the IAP into the "member pension contribution account"; see the full text of the amendment for additional changes.  Refer to the Legislative Staff Review and PERS Analysis of Legislative concepts found in the 2017 PERS and Legislative Analysis of Bills and/or Amendments section for additional information and analysis of the impact.

UPDATEAmendment #10 4.12.2017

UPDATE:Legislative Staff review of 560 Amendments - 3.15.2017

 UPDATE:Legislative Staff review of 560 Amendments - 4.12.2017

UPDATEFederal Pension Benefit Guaranty Corporation (PBGC)

UPDATE:PBGC Interest Rate Archive

UPDATEPublic Hearing held 2/13/2017.

UPDATEInformation Meeting (invited testimony only), held 3.15.2017 at 3pm.

UPDATEPublic Hearing to be held 4/12/2017 at 3pm.

UPDATE:Work session scheduled for 4/17/2017 at 3pm.

UPDATEMoved to Joint Ways & Means on 4.17.2017 with no recommendation as to passage; amendment to remove emergency clause.

UPDATEAs of June 14, 2017, no meetings and/or further discussions have been scheduled.

Visit the Oregon Legislative Information website for full text.

Senate Bill 791:

Eliminates limitations on hours that may be worked by a retired member of Public Employees Retirement System without suspension of retirement benefits.  A person who retires under the provisions of ORS 238.280 (1), (2) or (3) may be employed under this section only if the person's date of retirement is more than six months before the date the person is employed under this section.   [PERS Tier 1, Tier 2 and PERS OPSRP]

UPDATE:  Did not move out of committee.

Visit the Oregon Legislative Information website for full text.

Senate Bill 913:

Changes various provisions to Public Employee Retirement System. Assumed Rate - lesser of rate rate set by the PERS Board or the current rate for valuing annuity benefits by the federal Pension Benefit Guaranty Corporation [impacts Tier 1 Money Match formula] - Actuarial equivalency factor tables adopted under this section become effective on January 1 of the calendar year following adoption of the tables by the board or on another date sepecified by the board. Retirement Age for members establishing membership after the effective date of bill (effective on passage): OPSRP Regular Retirement Age increased to age 67 from age 65, OSRP Early Retirement age increased from age 55 to age 57. Redirects Employee Contributions (6% IAP account contributions) to a member pension contribution account and will be applied to the cost of the pension or other retirement benefits payable. Employer may not make (pick-up) the employee contribution on or after the later of January 1, 2018 or the expiration of any collective bargaining agreement in effect on January 1, 2018. Calculation of Final Average Salary - changes to 5 years or final 60 months [Pers Tier 1, Tier 2, PERS OPSRP]. Declared an Emergency, bill effective upon passage.

UPDATE:  Did not move out of committee.

Visit the Oregon Legislative Information website for full text. 

House Bill 3013:

Changes various provisions to Public Employee Retirement System. Assumed Rate - lesser of rate rate set by the PERS Board or the current rate for valuing annuity benefits by the federal Pension Benefit Guaranty Corporation [impacts Tier 1 Money Match formula] - Actuarial equivalency factor tables adopted under this section become effective on January 1 of the calendar year following adoption of the tables by the board or on another date specified by the board. Declared an Emergency, bill effective upon passage.

UPDATE:  Did not move out of committee.

Visit the Oregon Legislative Information website for full text.


To follow these bills and/or any of the other bills currently in the Legislature, visit the Oregon State Legislative website :
o  From the bills main page (link above), select "e-Subscribe Email" in the upper right corner.

To search bills on the Oregon State Legislative website:
o    In the "Search Bills" box (right hand side of page).
o    enter "retirement" and then refine search by selecting the bill.


Resources

o   Legality of PERS proposals  - Legislative Counsel Committee, August 2016
o   Analysis of Potential Legislative Concepts (11/18/2016)
o   Bipartisan PERS Solutions Workgroup Meeting
o   Oregon State Legislature
o   PERS Solutions Work Group
o   Presentation to the PERS Solutions Work Group (9/21/16)
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